Executives' lack of values was a key reason for the 2008 financial crisis, according to a report from the Richard Ivey School of Business. In response, the school teaches a course called Transcendent Leadership, which includes bringing in speakers with insights into the moral and ethical development of executives. FP Executive interviewed Mary Gentile — one of the course's guest speakers — and author of Giving Voice to Values and Gerard Seijts, Ivey professor and co-author of Leadership on Trial: A Manifesto for Leadership Development. Ms. Gentile is a senior research scholar at Babson College, and her work is being piloted in more than 100 business schools and organizations around the world. The following is an excerpt from that conversation:

Here is an excerpt from that conversation.

Financial Post: Ivey has made the case that the global financial meltdown of 2008 was at least in part the result of hubris and a lack of character and values on the part of leadership. Why does there appear to be such a disconnect between what leaders say and ultimately what they do?

Gerard Seijts: What came through loud and clear from the research was that many constituents, including business schools, have not paid enough attention to character and commitment as it relates to the role of leader. We see character as a set of core values and virtues: wisdom, courage, temperance. If you look at some of the behaviour on the part of the leaders prior to and during the financial crisis, there was not a lot of virtuous behavior. The same can be said with regard to the commitment to the leadership role. Were they listening to the whispers? Were they truly engaged in the organization? As one senior bank executive pointed out to us, too many business leaders don’t want to be held accountable.

Mary Gentile: There are a number of different reasons for that say-do disconnect. I like to think of it in terms of a bell curve. We have some folks at the tail end who are opportunists, who will do whatever it takes to maximize their self interest — values be damned. And at the other end, we have idealists, who will always try and act on their values regardless of the impact to their material self interest. I think most of us see ourselves as pragmatists, under the bell, people who would like to act according to their values so long as it doesn’t put them at a systematic disadvantage. We need to teach those pragmatists how to be more competent at voicing and acting on their values. Here’s where we have our opportunity.

FP: It seems to me you have taken a bottom-up approach in this book but isn’t corporate culture set at the top? If the culture is such that excessive risk taking is encouraged and rewarded and open discussion and transparency are shut down will these voices be heard?

MG: We talked to people at all levels. We found no matter where people sat, they felt they would act on their values if they thought they could. But we also found people at all those levels who did find ways to act on their values. The fact is there are different levers you can pull. If you are very junior, you are not going to change the compensation policy but you can start to ask questions, gather data, begin to find out if there are others who see what you see and feel the way you do. If you are very senior, you have more power to make changes but you also have to figure out how to bring everyone along with you. There is always something you can do.

FP: You have created a curriculum offering business students strategies to help them voice their values in the workplace. Could you provide an example of an effective way to approach a sensitive situation?

MG: Often it is a matter of asking questions with no particular axe to grind and making situations more visible than they were before. We interviewed one person who was working for a consumer electronics organization that outsourced most of its manufacturing to South East Asia. He visited the manufacturing sites and found some were fine while others had what he felt were unsafe and inhumane working conditions.

He was troubled by this and brought the issue back to his management in Europe and they said you can do whatever you want to improve conditions, but don’t increase costs. So he started doing small things, but he was frustrated and disappointed.

We found there were a number of coalitions within his industry working on this problem so it didn’t have to be him going alone to his management. He could have worked with these coalitions. Still, the very fact that he made this visible to management meant they were aware of the problem and they no longer had plausible deniability.

Many students would censor themselves before they had that conversation. This curriculum gives people the opportunity to anticipate this type of situation and practice what they would say. These arguments are not silver bullets but at least having students say them out loud to somebody who looks a lot like the person they are going to need to convince in the workplace helps build confidence. It’s really a kind of rehearsal.

FP: Is there a difference/distinction between personal values and corporate values? How should organizations be thinking about values and making sure these words are turned into actual behaviours?

MG: Most of the research suggests there is a shortlist of core values that are widely shared across cultures, time and people: honesty, responsibility, integrity, compassion. When you look at the typical list of corporate values, they overlap but they have been dressed up and made more explicit for the context in which the organization operates. Johnson & Johnson talks about supporting the health of families, for example. And many will talk about returns to their investors.

I just came from a session with 40 executives from Fortune 200 firms and it was all about this issue of values and ethics and training your employees to behave that way. Much of their training is about communicating the values and the policy and the regulations and analyzing situations to see if they fit within the policy and the regulations. But they did not take it to the next step, which is to say, when you know something doesn’t quite fit then how do you start a conversation within the organization to address the problem. The way you do that is by practicing. The very act of asking someone to practice that conversation means you think they should be having that conversation. And that speaks volumes.

GS: I think if leaders truly care about values then the issue is can you live those values as opposed to can you live with those values. To live them you act on them every single day. All these value statements on the walls are nice but there is often confusion about what they really mean. What does integrity mean in our organization? How might it be reflected by the CEO or middle management or people on the shop floor? How do we go from a concept to actual meaning?

FP: Is a focus on values unique to mature markets? Are emerging markets thinking in these same terms? How does a strong corporate culture based on solid values drive performance?

MG: Yes, it’s very much being discussed in emerging markets. I’ve been in India each year for the past seven or eight years and they realize there are stereotypes about behaviour in different cultures, which are sometimes true and sometimes false, that can get in the way of their market success. They are very concerned about that.

There has been a lot of research around whether or not companies that act on their values do better financially and the best research I have seen shows that you can do well financially with bad values and you can do well financially with good values. We shouldn’t be so stuck on this question of whether values pay, and rather ask the question how can we make values pay — because they can pay.

What can we learn from successful companies that have longevity and operate with integrity? Obviously in the short run there is always a way to cheat someone. What we owe our future business leaders is to teach them how to do well for the long term and make your values pay.

GS: Look at Maple Leaf Foods and the leadership of Michael McCain and how he handled the listeriosis crisis. One of their core values is transparency. They lived up to that. And that is what led them to a quick turn-around. And then there is WestJet, another company with a strong corporate culture where everything is focused on delivering a great guest experience. They define culture as values in action. Everyone there knows what the right behaviors are to help the organization deliver for the long term.

FP: What are the values/expectations of the students you see as they start their careers? How do they leave you feeling about the future of our businesses?

MG: We both have seen a number of studies on this new generation that suggest they are very concerned about sustainability and the environment. They are acutely aware of global interdependence. IBM does an annual study of global CEOs interviewing them on the state of business and the state of the world. This year they did a companion survey of business majors, and found a good amount of overlap. Both groups defined, globalization, the environment, interdependence, sustainability as the big issues. But whereas the CEOs viewed them as challenges and there was an anxiety around it, for the young people there was a sense that they were more comfortable dealing with these issues, this was the water they swim in, the world they grew up in. I think that is profoundly hopeful.

Almost Done!

Postmedia wants to improve your reading experience as well as share the best deals and promotions from our advertisers with you. The information below will be used to optimize the content and make ads across the network more relevant to you. You can always change the information you share with us by editing your profile.

By clicking "Create Account", I hearby grant permission to Postmedia to use my account information to create my account.

I also accept and agree to be bound by Postmedia's Terms and Conditions with respect to my use of the Site and I have read and understand Postmedia's Privacy Statement. I consent to the collection, use, maintenance, and disclosure of my information in accordance with the Postmedia's Privacy Policy.

Postmedia wants to improve your reading experience as well as share the best deals and promotions from our advertisers with you. The information below will be used to optimize the content and make ads across the network more relevant to you. You can always change the information you share with us by editing your profile.

By clicking "Create Account", I hearby grant permission to Postmedia to use my account information to create my account.

I also accept and agree to be bound by Postmedia's Terms and Conditions with respect to my use of the Site and I have read and understand Postmedia's Privacy Statement. I consent to the collection, use, maintenance, and disclosure of my information in accordance with the Postmedia's Privacy Policy.